Cable maintains positive tone and extends advance in early European session trading on Wednesday, following Tuesday’s 0.76% rally which penetrated and closed within thick daily cloud (cloud base lays at 1.3024).
Fresh bulls, boosted by renewed Brexit optimism on media reports that talks between the government and opposition made substantial progress in Brexit talks, pressure key Fibo barrier at 1.3062/68 (38.2% of 1.3381/1.2765 descend / weekly cloud base).
Sustained break here would generate bullish signal for extension of recovery leg from 1.2865 (25 Apr low) and expose targets at 1.3090 (55SMA) and 1.3123 (50% of 1.3381/1.2865).
Rising momentum is about to break into positive territory and supporting the advance, however, stochastic is entering overbought territory and warning of bulls’ hesitation at key Fibo barrier.
Consolidation is expected to hold above broken daily cloud base / 20SMA (1.3024/11) to keep bulls in play.
Today’s calendar is full and immediate focus turns on UK Manufacturing PMI (Apr 53.2 f/c vs 55.1 prev), with a batch of US data due in early US session, expected to give further signals ahead of Fed’s rate decision. The US central bank is likely to stay on hold (2.5%) and ignore pressure from President Trump for rate cut, but dovish shift is also expected.
Bank of England’s rate decision is due tomorrow and expected to stay unchanged.
Res: 1.3062, 1.3068, 1.3090, 1.3123
Sup: 1.3052, 1.3024, 1.3011, 1.2972
